TITLE
Recommendation to authorize City Manager to amend a Loan Agreement with John Morris for Smooth’s Sports Grille, located at 144 Pine Avenue. (District 2)
DISCUSSION
Various economic development-related loans were made to John Morris dating back to 1988 when the Long Beach Local Development Corporation, on behalf of the City, loaned him $613,000 comprised of a $500,000 SBA 503 loan and a separate $113,000 loan. Subsequent loans, in the amount of $87,000 and $92,000, were made in 1989 and 1990, respectively, for a total of $792,000. Mr. Morris (and then Mum's restaurant) has played a vital role in the redevelopment of downtown Long Beach and, in particular, Pine Avenue for many years. The loans to Mr. Morris were made at a time when Pine Avenue was suffering economically, and struggling to become a major site for restaurants and other businesses critical to the success of any downtown.
On January 20, 2004, Mr. Morris repaid the $500,000 SBA 503 loan. Simultaneously, the City Council approved the restructuring of these remaining loans into a zero percent interest, six-year loan with equal monthly payments commencing January 1, 2005 and ending on December 1, 2010 (see attached City Council letter).
Consistent with the 2004 agreement to restructure the loans, Mr. Morris made an initial payment of $29,199.96 to bring his account current and prepaid the 2004 calendar year payments totaling another $29,199.96. However, since January 2005, Mr. Morris has made only 4 monthly installment payments. As of December 31, 2006, the outstanding loan balance, including accrued penalties, was $167,778.48.
Attached is a copy of the letter, dated August 14, 2006, in which Mr. Morris requested that the monthly payments of $2,433.34, including past due amounts, be deferred until May 2008. Mr. Morris points to several factors that slowed the economic growth of his business, Smooth's Sports Grille (Smooth's), including the slow pace of area residential development, on-going con...
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